The interim Finance Minister, Dr Shamshad Akhtar, announced during a press conference that the caretaker government is planning to increase electricity and gas tariffs in January to address the circular debt issue, in line with the International Monetary Fund’s (IMF) Stand-By Arrangement (SBA).
The circular debt in the power and gas sectors, currently exceeding 4 per cent of the Gross Domestic Product, requires urgent action for reduction.
Dr Akhtar also discussed tariff revisions with the IMF and the potential imposition of additional taxes on sectors like real estate and retail, emphasizing that final decisions are pending.
She highlighted the necessity for a new short-term IMF program and anticipated a medium-term program under the Extended Fund Facility (EFF) after the SBA concludes.
Regarding the external financing gap, Finance Secretary Imdad Bosal expressed optimism that a successful IMF review would unlock programme and project loans from multilateral lenders.
He anticipated approvals in December for loans from the World Bank, Asian Development Bank, Asian Infrastructure Investment Bank, and Islamic Development Bank.
Bosal assured that there is no external financing gap, and the improved ratings post-review would attract foreign loans.
Dr Akhtar stated that the World Bank is expected to disburse $2 billion during the current fiscal year, contributing to foreign exchange reserves along with the $700 million tranche approval from the IMF, bringing the total disbursement under the SBA to $1.9 billion out of $3 billion.
The approval for the second tranche from the IMF’s Executive Board is anticipated within a month.